[June 11, 2014]DUBLIN (Reuters) - The
European Commission will launch a formal investigation
on Wednesday into Apple Inc's <AAPL.O> tax arrangements
in Ireland, Irish state broadcaster RTE reported,
without naming its source.

The EU's competition authority said last year that it was looking
into corporate tax arrangements in several member states and had
requested information from Ireland.

Antoine Colombani, a spokesman for competition issues at the
Commission, declined to comment on the RTE report. Ireland's finance
ministry said it had not been informed of any investigation.

Irish Prime Minister Enda Kenny declined to comment on whether the
Commission might be preparing to open an investigation but said he
was confident of the legality of Ireland's tax system.

"We believe that our legislation ... is very strong and ethically
implemented and we will defend that very robustly," Kenny told
journalists in Dublin.

A U.S. Senate subcommittee investigation revealed last year that
Apple had cut billions from its tax bill by declaring companies
registered in the Irish city of Cork as not tax resident in any
country.

Senator Carl Levin, chairman of the subcommittee, said the Apple
structure represented "the Holy Grail of tax avoidance."

Apple in the United States entered into deals with the Irish
subsidiaries whereby the Irish units received the rights to certain
intellectual property that were subsequently licensed to other group
companies, helping ensure almost no tax was reported in countries
such as Britain or France.

Apple's Irish arrangement helped it achieve an effective tax rate of
just 3.7 percent on its non-U.S. income last year, its annual report
shows – a fraction of the prevailing rates in its main overseas
markets.

The focus of the investigation will likely be tax regimes that are
favorable to certain companies, including Apple, rather than the
companies themselves. Technology companies such as Google Inc <GOOGL.O>
and Microsoft Corp <MSFT.O> have cut their overseas tax rates to
single digits by establishing Dublin-registered subsidiaries, which
they have designated as tax resident in Bermuda.

An Apple representative had no comment. The company has previously
said it complied with the law. "We pay all the taxes we owe - every
single dollar," Apple Chief Executive Tim Cook testified to U.S.
Senate committee investigators last year.

Apple shares ended up 0.6 percent at $94.25 on the Nasdaq on
Tuesday. Analysts say that the investigation is unlikely to have a
major impact on Apple's share price.

Piper Jaffray analyst Gene Munster said investors are currently
"hyper-focused" on new product speculation.

"I don't think it will be a problem unless Apple did something
illegal," said Munster.

(Reporting by Conor Humphries; Additional reporting by Barbara Lewis
in Brussels and Christina Farr in San Francisco and; Editing by
Louise Heavens and David Evans)